Kia ora,
we're back today
talking about Megatrends.
And as a reminder,
Megatrends are indelible forces
shaping the economy, politics, society,
and the broader world that we're in.
Not trends
that are going to be a fad for this year
and then disappear,
but things that will have
a fundamental consequence
on the way that we live
our daily
lives and businesses need to operate.
I'm excited
that we're here today
to talk about one of those Megatrends,
the green economy.
And with me here today is Richard Hobbs,
a principal in BCG's Auckland office
and the lead author
on the Green Economy Report.
Richard, great for you to be here.
Thank you, Phillip.
Great to be here, too.
Now, as a start, let's just understand
what is the green economy
and how how do we think about it?
Yes, so the green economy is any green
infrastructure or green products
and services
out there that will be bought by consumers
over the coming years.
Cool, though, is this things like,
you know, organic foods and things
like that. You know what?
What? Bring it to life for me.
So it could be green construction
or building materials,
there could be green tourism,
green construction,
green energy.
Really any products
that have a minimal impact
on the environment
or at best actually
improve the environment
in their creation and development.
And why is this a Megatrend
and not just a trend?
Well,
it is definitely a Megatrend because
as we all know,
climate change is a very real
and serious issue for our globe,
so is declining species.
And so it's very important
that as humanity,
we can ensure that we can,
you know, support
and still grow the economy,
but while
preserving and enhancing
our natural capital.
And I think we've seen
a lot of that recently in New Zealand
with some of the challenges
around Cyclone Gabriel and the flooding.
And that's made it really relevant
and real to many people like
it hasn't been.
Yes, absolutely.
No, this is a very real issue
and it's not just happening overseas.
And also the impact in some areas
like emitting greenhouse gases
that we have here in New Zealand
impacts people all around the world
as well.
Anyway it's an interesting
take that it's not just
going to be a cost or a challenge,
but that it's also an opportunity.
Could you talk to me a bit about that.
Yes, absolutely.
So the green economy globally is roughly
$3 trillion today annually.
That's forecast
to triple to $9 trillion by 2030.
So grow very, very quickly.
And we're already seeing this
at the moment.
Now, New Zealand
is actually very well placed
to compete well in the green economy.
And this is
because we've got
this wonderful natural capital
and natural resources which mean that
people
are drawn to New Zealand
as a tourism destination.
We have one of the highest
renewable energy percentages in the world
and we have got much more abundant
available resources
still to develop, which is fantastic.
And we are naturally endowed
with great forestry resources,
which means we can have a thriving
bio economy,
sustainable construction,
sustainable packaging
and other products and services
that can be derived from that.
In top of many of our audience minds
will be
well, what does that mean for me
individually, as a worker, as a consumer,
or as a business owner
Well, definitely for businesses
it's about how you can find
your source of competitive advantage
in the green economy.
So in the report, we outline five areas
tourism, energy,
construction, food,
and consumer products.
Now, depending on which
part of the market you operate in,
there are a number of opportunities
there for businesses
to identify
how they can differentiate
not just locally but globally.
So, for example,
you know, around food products,
we already have the lowest carbon
milk production in the world
and we have an opportunity to,
you know, take that to the next level
and be a real standout
in this green economy.
And so is this
just about growing revenue
or is it more than that?
Well, yes,
it's definitely
more than just growing revenue.
I mean, there's
a clear benefit for employees as well.
I mean, we know from
from our research as well
in BCG that employees have a
you know,
are much more attracted
to companies that are genuine
about dealing with
and contributing positively towards major
environmental issues.
Additionally, we know that
it can create a greater
affinity with consumers and stronger
brand perception
because consumers are now seeking
they're looking for
these sustainable products,
often difficult to find.
There's a lot of information out there,
sometimes even greenwashing.
So companies that can do this
well and can do this
through genuine environmental improvement
can create that strong affinity
with their customers.
That's great.
It sounds like there's
a real positive impact
on potentially top line revenue
and even your employee affinity.
But tell me more about costs.
Won't
this just raise the costs of the business
and ultimately diminish profit?
Yes.
So there are three
elements really to cost.
So the first one is
there are some great examples
historically where an investment
in our natural capital
has really paid off.
So, for example,
the preservation
of our environment
and 100% pure
New Zealand
brand has been really very seminal
in the growth of our tourism industry
and has paid off in dividends.
I think secondly,
the cost of technology
and particularly green technology,
is improving so quickly.
The cost of renewable
energy technologies
coming rapidly down the cost curve
means that it makes sense
now to be able
to deploy
some of these technologies at scale
and profitably.
And finally,
the efficient use of resources
is actually
a productivity play in many ways,
so that can improve productivity
and the cost equation
for businesses as well.
Fascinating and
it's really great to think about
all the dynamics involved in this
because it is quite complex.
I know one thing that lots of executives
I speak to say
is that
it is really exciting,
but will consumers really buy into this?
Will it really make a difference?
like
What do you think?
Yes, it's
a really good question
and one that's
definitely top of mind for executives.
And I think, you know,
we'll definitely have to wait and see.
But,
you know, I was in
Europe recently
and they're one of the
first movers on the space.
And certainly consumers
are starting to pay premiums.
And there are many companies moving there
at a very quick speed.
Companies like Nestlé,
who have got
very ambitious targets in place
and they know
or they have the faith
that ultimately consumers will
be willing to pay
for these sustainability credentials.
The other thing
which really came through our report,
as we're noticing
an increasing trend
in premiumisation or premium products,
particularly across Asia
with the emergence of the middle
classes there.
Tell me more
like what is premiumization of products?
Like help us understand that a bit more.
What we're starting to see is,
you know, in Asia,
certainly there is this perception
that New Zealand food
is really a premium product.
It's safe.
You know, it's it's naturally produced.
And so we can really play on that concept
of the New Zealand brand
and the New Zealand provenance.
And I think when we add,
you know, the sustainability credentials
and in
time as consumers
preferences continuously evolve towards,
you know,
those types of product attributes,
then I think New Zealand
is really well-placed
to capitalize on those opportunities.
Hey, is there anything else in the report
that you'd like to mention
for our audience today?
This is a huge Megatrend.
There will be
some countries who will come out of this
as global superpowers. Now as New Zealand,
you know, we are
probably not in that position,
but the pie will be so big
that if we play to our strengths
and we do what we do
well in a few areas,
we can create outsized impact
and drive very significant
economic growth
and environmental improvement
for our economy and country and society.
Yeah,
I think that idea around deaveraging,
not trying to be the best at everything,
but really
sticking to your natural assets
and where you can win in
this space
is going to be fundamental
to New Zealand's future.
Thank you so much for that, Richard.
It's really great
to have had this chat with you today.
I'm
sure everyone will love to
read the report in detail.
And of course,
we're always happy to engage
with those who are interested
to learn more
about the report
and how it may be
impacting your business.
So please
don't hesitate
to reach out to Richard or myself.
Thank you. Kia ora.